The impressive water savings achieved as a result of water restrictions needed to become the new normal, the head of the state's water sector Jim Bentley said.
Friday's Hunter Business Chamber lunch heard Lower Hunter water consumption was down 26 per cent in January compared to what would be expected for the month.
While acknowledging restrictions had the potential to have adverse social and economic impacts, Dr Bentley said helping individuals and businesses improve their water efficiency was fundamental to improved long-term water security.
"We are still using 15 per cent more than Melbourne. So we have to ask ourselves are the savings we have made just wastage that we should have been dealing with some time ago or have we gone to far?," Dr Bentley, who was managing director of Hunter Water until last year, said.
"People tell me there are differences between Sydney and Melbourne and of course there are but we need to understand what the right level should be and not just accept it is what it is."
Another priority area was increased water recycling projects.
While Israel recycles 95 per cent of its wastewater for use in its agriculture sector, only 13 per cent of Lower Hunter wastewater is recycled.
"I just can't get my head around how that is the right answer," Dr Bentley said.
"We have lots of discussions about what purpose recycled water should be used for. One thing I'm certain of is that it should be used for something more beneficial that just chucking it out into the ocean or the river."
Combined Lower Hunter water storages were at 61.2 per cent on Friday, an increase of 8.6 per cent on the week before.
But Hunter Water's chief operating officer Darren Cleary cautioned against assuming the drought was about to end.
"Are we seeing a small blip, a minor recovery while the drought continues or are we on the way back to normal rainfall. We simply don't know at this point," he said.
"If we have a large rainfall event we could be back at 100 per cent capacity within a week."
Despite achieving the equivalent of 18 months to two years worth of water in just a few days, Dr Bentley said planning to augment existing supplies needed to continue.
"For the two main metropolitan areas of NSW we are going to have to do significant supply augmentation in a relatively short period of time," he said.
His comments follow the release last week of a series of options to improve water security in the Lower Hunter.
Options include a Newcastle desalination plant, a new dam and expanding the proposed Belmont desalination plant.
Hunter Water is about to commence a community engagement process to discuss the options as part of the Lower Hunter Water Plan.
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